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Technology Stocks : Novell (NOVL) dirt cheap, good buy? -- Ignore unavailable to you. Want to Upgrade?

To: Pruguy who wrote (28275)	9/26/1999 10:40:00 PM
From: Frederick Smart	Read Replies (3) \| Respond to of 42771

Naked Puts.... >>Do many of us a favor...you did not answer DOUG's question and I have never been able to follow your explanation to where it violates any law, or even is any different than what Novell does...Sounds like nothing more than selling naked puts to offset the cost of options...works if the stock goes up, doesn't if it goes down....both stocks have gone up so far, so where is the problem?>> Pruguy: I didn't say the basic act of selling puts violated anything. The problem will surface when the stock goes down. How will Microsoft satisfy their put obligations? How will they buy all this stock? When asked this, Maffi - their CFO - chuckled that they would just issue more stock to satisfy the delivery when Wall Street "puts" the stock to them. There may be 168 million put option warrants out there - a small number when stacked against their total shares outstanding- but does this include all the listed put option contracts they've been selling over the past 4+ years? The other interesting thing ask is "who is on the other side of these massive trades?" If there is a direct connection between these trades and a financial relationship with Microsoft, then one could argue collusion. If there is collusion, then one must examine the pricing of these puts. My guess would be the pricing is at very favorable terms. All this says nothing about the financial fraud going on inside Microsoft: 1) deducting the taxes employees owe Uncle Sam when they exercise their options while NOT taking as an expense the difference between the exercise price and the current stock price; 2) failing to put on the balance sheet over $66 billion (the difference between excercise prices and current stock price of unexercised options X total shares) owed to employees who haven't exercised their stock options. If the street looks the other way on all this by saying "everyone is doing it" then I guess we are all just gullible. But this is a ruse, not inflated expectations and values which Balmer is trying to blame the public for somehow believing. If a select few broker dealers had their hands in collusion with Microsoft with this put option strategy, IMHO they are no different than the rogue Savings & Loans who had a party in the 80's at taxpayers expense. Today, the retirement and mutual fund complex will suffer the most. The general public has been seeing numbers from Microsoft which, based on these revelations, simply aren't fair for they aren't real. Microsoft can't have their cake and eat it, too. If they get away with this stuff then you can pretty much figure the entire street will eventually cook the same books for more and more companies to raise equity value in the same way going forward. If they haven't begun to already, I say the SEC and Fed should investigate this matter. Microsoft's upcoming 10K should be interesting. Peace. GO!!